135 A. 814 | N.J. Super. Ct. App. Div. | 1927
The present appeal brings up for review two decrees of the court of chancery entered in the above cause, the first of which adjudges the defendant corporation to be insolvent and appoints a receiver to take charge of and administer its assets and property, and the second of which directs the receiver to sell the lands and real estate, and also the personal property of the corporation, free and clear from all mortgages, liens and encumbrances against either the real or the personal property.
Our examination of the proofs sent up with the appeal satisfies us that the decree adjudging the corporation to be insolvent was entirely justified; and that, consequently, the appointment of a receiver cannot be successfully challenged.
We consider, however, that the decree which orders the sale of the corporation's property and assets, so far as it directs that the real estate be sold free and clear of all encumbrances, cannot be legally justified. As was pointed out by this court inRandolph v. Larned,
We have not overlooked the fact that this decree for sale was made with the consent of the savings institution; but that consent cannot operate to enlarge the jurisdiction conferred upon the court by the statute. The legislative purpose, as we conceive, is not only to protect encumbrancers, but also general creditors; and the sale of property free and clear of a first mortgage, the validity of which is not in any way disputed, would almost necessarily prevent such creditors from protecting their interests by becoming bidders at the sale, for it would require them to raise in cash the full value of the real estate to be sold, instead of permitting them to purchase the property subject to valid existing liens thereon.
For these reasons we conclude that the decree for sale should be modified so as to provide that the sale of this property shall be made subject to the lien of the Franklin Savings Institution's mortgage.
It will be so ordered.
For affirmance — None.
For reversal — None.
For modification — THE CHIEF-JUSTICE, TRENCHARD, MINTURN, KALISCH, BLACK, KATZENBACH, CAMPBELL, LLOYD, VAN BUSKIRK, McGLENNON, KAYS, HETFIELD, JJ. 12. *528